The telecoms watchdog, Oftel, today ordered BT to cut the cost of its wholesale unmetered internet access by 8.5%.
BT, which sells unmetered internet access through BT Openworld, also controls the digital local exchanges through which other operators provide unmetered access. It then charges them for the capacity they use.
Oftel said the price reduction, which is slightly greater than the 7% cut it proposed in February 2002, gives internet service providers the opportunity to pass a saving on to consumers.
ISPs, who have long argued that BT has been slow to release control of its local exchanges, had wanted the price cut to be applied retrospectively.
But a spokesman for BT said: "We're disappointed that they haven't taken our view that this is a pretty mature market that doesn't require this sort of regulation.
"On the other hand, we're pleased that they haven't agreed with the view of other service providers, that the price cuts should be retrospective."
A spokesman for Freeserve said: "A reduction of this order has been expected for some time and has already been factored into our economics. We look forward to its implementation by BT."
David Edmonds, director general of telecommunications at Oftel, said: "Oftel must ensure that the charges BT make to other operators for internet capacity on its network are fair and reflect BT's costs.
"This reduction means that operators can now buy capacity from BT cheaper than before. Operators have the opportunity to pass these savings on to ISPs and through them to consumers."
More than 11 million UK households are connected to the internet through what is known as narrowband - as opposed to the more recent broadband, which offers faster access.
Of those, 4 million pay a flat monthly rate regardless of how much time they use the internet. The remainder pay for the time they are online.
BT was yesterday relieved to learn that Oftel was not intending to order it to separate its retail division from its exchanges, as the select committee on culture, media and sport had suggested.
